Dubai-based developer Union Properties on Monday reached an agreement with Emirates NBD that restructured an outstanding Dh946 million debt with the bank.
The deal with Dubai's biggest lender, which includes payment of an initial amount as per the new terms, will significantly improve the company's debt profile, Union Properties said in a filing to the Dubai Financial Market, where it shares trade.
The new agreement with better terms will reduce Union Properties’ debt instalments and improve the company's cash flow. Emirates NBD is the main creditor of the company and restructuring of its outstanding debt will raise Union Properties' debt profile, it said without giving details of the new agreement.
"Restructuring our outstanding debt with Emirates NBD was our number one priority,” Khalifa Hasan Al Hammadi, chairman of Union Properties, said. “With better cash flows and the support of our main creditor, we can from this day [forward] exclusively focus on the development of our activities and projects.”
The company has dealt with legacy issues and it is now “fully geared for a new growth chapter”, Mr Al Hammadi added.
Union Properties is the master developer behind Dubai’s Motor City, Uptown Mirdiff and the Green Community project. At the end of 2019, the company reported total borrowings of Dh1.8 billion, of which about Dh1.4bn was due for repayment this year, according to a note in its financial statements filed at the time.
In June, the company proposed a resolution to use up to Dh332.8m of its statutory reserve to write off historic losses; however, its shareholder rejected the proposal.
A fully-owned unit of Union Properties has also begun an arbitration process to recover about Dh1.5bn related to the construction of a project that was completed a decade ago, it said in a bourse filing in May.
Union Properties struggled to maintain profit growth amid a slowing real estate market and swung to a loss of Dh219 million in 2019 from a profit of Dh62m the prior year. The company has not reported first quarter earnings.
On Sunday, Union Properties said it completed a blueprint of its three-year strategy and plans to roll out a new project in Dubai. Motor City Hills, a development next to the Dubai Autodrome on Sheikh Mohammed Bin Zayed Road, will include 195 villas, 490 townhouses and six commercial land plots.
The company is also planning a Dh200m expansion of the Dubai Autodrome. Union Properties is also turning its three units – ServU, The Fitout, and the Dubai Autodrome – into private joint stock companies as it reorganises its business to cut costs and improve its bottom line.
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